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A Look Back at the ACA – Premiums, Carriers and Insured Americans

A Look Back at the ACA – Premiums, Carriers and Insured Americans.

As we usher in a new President today with an eye on “repeal and replace”, this newsletter will look back at the ACA Plans, review the Federal Exchanges as well as the most recent developments to address Premiums, Carriers and the Insured Americans.

Premiums

The most recent Open Enrollment for the Federal Exchange Marketplace gave President-elect Trump a boost in his campaign. Health insurance carriers pulled out of the Exchanges in record numbers this year as well as most consumers were faced with rising rates by as much as 200% in some states (145% in AZ) for ACA Plans. Premiums continue to go up, provider networks are getting smaller and plan designs continue to get watered down. The following partial chart from the Kaiser Family Foundation (www.kff.org) represents ACA plan premiums since the inception of the Federal Exchanges in 2014 until the most recent 2017 Open Enrollment. The right half of this chart illustrates the premiums to the consumer After Tax Credit (Federal subsidy).

Table 1: Monthly Silver Premiums and Financial Assistance*

40 Year Old Non-Smoker Making $30,000 / Year

State

Major City

2nd Lowest Cost Silver

2nd Lowest Cost Silver

Before Tax Credit

After Tax Credit

2014

2015

2016

2017

% Change

% Change

2014

2015

2016

2017

% Change

from 2016

from 2014

from 2014

Arizona

Phoenix

$197

$177

$207

$507

145%

157%

$197

$177

$207

$207

5%

California

Los Angeles

$255

$257

$245

$258

5%

1%

$209

$208

$208

$207

-1%

Colorado

Denver

$250

$211

$278

$313

12%

25%

$209

$208

$208

$207

-1%

DC

Washington

$242

$242

$244

$298

22%

23%

$209

$208

$208

$207

-1%

Florida

Miami

$269

$274

$262

$306

17%

14%

$209

$208

$208

$207

-1%

Georgia

Atlanta

$251

$255

$254

$286

13%

14%

$209

$208

$208

$207

-1%

Hawaii

Honolulu

$183

$200

$262

$347

32%

90%

$181

$179

$179

$178

-2%

Illinois

Chicago

$212

$215

$198

$291

48%

37%

$209

$208

$198

$207

-1%

Kentucky

Louisville

$205

$212

$223

$229

3%

12%

$205

$208

$208

$207

1%

Louisiana

New Orleans

$311

$296

$332

$373

13%

20%

$209

$208

$208

$207

-1%

Minnesota

Minneapolis

$154

$183

$235

$366

55%

138%

$154

$183

$208

$207

34%

Nevada

Las Vegas

$238

$237

$261

$282

8%

18%

$209

$208

$208

$207

-1%

New York

New York City

$365

$372

$369

$456

24%

25%

$209

$208

$208

$207

-1%

Pennsylvania

Philadelphia

$300

$268

$276

$418

51%

39%

$209

$208

$208

$207

-1%

Texas

Houston

$245

$250

$256

$288

13%

18%

$209

$208

$208

$207

-1%

Utah

Salt Lake City

$209

$215

$244

$292

20%

40%

$209

$208

$208

$207

-1%

AVERAGES

Cities listed above

$243

$242

$259

$332

30%

42%

$203

$203

$206

$205

1%

* Data listed above is from the Kaiser Family Foundation website www.kff.org

As you can see, the average premium increase from calendar years 2016 to 2017 was 30%. Over the past 4 years, the average increase in total was 42%. The interesting part about this chart is the subsidy offsets. If you look at the average premium after tax credit in 2014 of $203 versus the 2017 premiums of $205, that’s a 1% increase in total. That means that the Federal Government is funding this difference though fees, taxes and fines. There are 2 more parts to determine the success or failure of the ACA – carrier support/participation in the exchanges and the change in the number of uninsured Americans.

Carrier Participation

We took a look at the same states as above and compared the number of participating medical carriers that started in the Exchange from 2014 through the most recent 2017 Open Enrollment. As you can see, the biggest change was between 2016 to 2017 at almost 28% reduction in carrier options. As you can see from the chart, carriers actually started pulling out in 2016. Why have so many carriers pulled out? The answer is simple, massive losses in Exchange plans. According to the research firm McKinsey & Company, health insurers lost $2.7 billion in 2014. To give it some local perspective, in June of this year the Arizona Republic reported losses of $185 million by Blue Cross / Blue Shield combined for 2014 and 2015. The carriers thought the Exchange business would get more stable but instead it’s been more volatile every year since inception.

Table 2: Total Number of Insurers by State, 2014 – 2017**

Total Number of Issuers in the Marketplace

State

2014

2015

2016

2017

Percentage Change from 2016

Percentage Change from 2014

Arizona

8

11

8

2

-75.0%

-75.0%

California

11

10

12

NA

NA

NA

Colorado

10

10

8

NA

NA

NA

DC

3

3

2

NA

NA

NA

Florida

8

10

7

5

-28.6%

-37.5%

Georgia

5

9

8

5

-37.5%

0.0%

Hawaii

2

2

2

2

0.0%

0.0%

Illinois

5

8

7

5

-28.6%

0.0%

Kentucky

3

5

7

3

-57.1%

0.0%

Louisiana

4

5

4

3

-25.0%

-25.0%

Minnesota

5

4

5

NA

NA

NA

Nevada

4

5

3

3

0.0%

-25.0%

New York

16

16

15

NA

NA

NA

Pennsylvania

7

9

7

6

-14.3%

-14.3%

Texas

11

14

16

10

-37.5%

-9.1%

Utah

6

6

4

3

-25.0%

-50.0%

HealthCare.gov Average

4.5

5.9

5.4

3.9

-27.8%

-13.3%

** Data listed above is from the Kaiser Family Foundation website www.kff.org

Insured Americans

According to the RAND Corporation study, there are 16.9 million more Americans with health insurance. How did they arrive at this number? The RAND researchers estimate that from September 2013 to February 2015, 22.8 million Americans became newly insured and 5.9 million lost coverage, for a net of 16.9 million newly insured Americans. Among those newly gaining coverage, 9.6 million people enrolled in employer-sponsored health plans, followed by Medicaid (6.5 million), the individual marketplaces (4.1 million), non-marketplace individual plans (1.2 million) and other insurance sources (1.5 million). According to the RAND study, one of the reasons why people are signing up is the individual mandate. One of the law’s most controversial provisions, this mandate requires that most adults must have coverage or pay a fine. Early in the policy debate over competing legislative designs for reforming the health care system, analysis using RAND’s COMPARE model showed that the individual mandate would be a powerful policy lever in encouraging the uninsured to get coverage.

Conclusion

The debate over whether ACA is a success or not will rage on. It really depends on who you ask. Carriers are running from it but the previously uninsured have seen the ACA as nothing short of a life-saving piece of legislation. Either way, it is a hotly contested topic in the face of repealing and replacing Obamacare. Look for Volume 2 of this 3-part series in February 2017. The next issue will address President Trump’s 7-point replacement plan to fix the healthcare system.